"This is a difficult decision, as it impacts both our employees and GO.com users. However, the
Internet environment has continued to shift and change, and therefore our strategies must also change," said Steve Bornstein, chairman of Walt Disney Internet Group.

Rumors of the restructuring of Disney's Internet operations have circulated since the beginning of the year. Adding fuel to the speculation, other web businesses of traditional media organizations such as NBC and CNN have already undertaken drastic reorganizations. Disney's actions were first reported in London's Financial Times on Sunday when Disney executives outright questioned the viability of a portal business model.

"The advertising community has abandoned the internet," said Michael Eisner, group chairman and chief executive. "If a portal becomes only a search [engine] and directory, then a portal may not be what we want."

Only last October, Go.com relaunched to leverage Disney's strengths, focusing primarily on sports and entertainment. The redesign efforts actually began January 2000 when The Walt Disney Internet Group , the Internet business of the Disney Company, temporarily pulled the plug on the site. At that time, the company had lost $1 billion the previous year of which a large part was attributed to Disney's purchase of search engine Infoseek.

Worsening the situation is the drop-off in online advertising, which has prompted a review of the return on investment, the FT reported.

Disney Internet Group has already sold Infoseek Japan, the fourth largest search portal in Japan, to an e-commerce company named Rakuten Inc.